Armstrong World Industries on Monday posted a 41.4 percent rise in net profits for the second quarter, helped by a sharp drop in expenses.

Net profits were $37.9 million (64 cents a share), up from $26.8 million (46 cents a share) in the second quarter of 2010.

Sales of its floors, ceilings and cabinets grew 3.3 percent to $748.6 million, thanks to favorable foreign exchange rates.

Actually, Armstrong said, it sold lower quantities of its products in the period. But sales still climbed, it explained, because Armstrong boosted its prices and sold more of its higher-priced goods.

The sales uptick helped pump profits, as did lower manufacturing costs and a $9.6 million drop in selling, general and administrative expenses.

These more than offset numerous drags on profits.

They included restructuring charges, higher interest expense and raw-material costs, and lower earnings from its WAVE ceiling-grid joint venture.

Armstrong noted that its cost-cutting program, dubbed "LEAN," is performing better than predicted.

Initially Armstrong expected LEAN to yield savings of $150 million over several years, including $65 million this year.

Armstrong on Monday increased those estimates to $165 million and $90 million respectively.

That's a significant development for Armstrong.

The company is using cost cutting as a way to improve profits in the face of soft demand and increasing raw-material costs.

Taking a closer look at Lancaster-based Armstrong's four business segments in the second quarter, all performed better.

(Armstrong provides sales and operating profits — profits before taxes and interest expense — for the segments.)

The building products (ceilings) segment, the company's biggest segment, led the way with solid results.

It saw operating profits climb 7.7 percent to $57.1 million as sales improved 7.2 percent to $305.0 million.

Armstrong attributed the upturn to price increases, lower manufacturing costs and selling more of its higher-priced items.

The ongoing lockout at its Marietta ceiling plant did not affect the quarter's results.

The lockout of 260 unionized workers there began July 17, after the June 30 conclusion of the quarter.

The lockout was not mentioned by Armstrong management during a 55-minute conference call with Wall Street analysts Monday afternoon.

At the resilient flooring segment, operating profits were up 13 percent to $11.3 million despite a 0.5 percent dip in sales to $274.7 million.

Lower manufacturing costs and lower selling, general and administrative expenses more than offset $5.9 million in severance and restructuring charges at its European flooring business.

The wood flooring segment saw a 12-fold jump in operating profits to $13.4 million as sales grew 5 percent to $133.6 million.

Higher sales and reduced costs fueled the better profits, according to Armstrong.

The cabinets segment posted an $800,000 operating profit, reversing a $400,000 loss, though sales slid 5.1 percent to $35.3 million.

Lower selling, general and administrative expenses again got the credit for the upturn.

tmekeel@lnpnews.com